State agency failed to collect $185M in pollution cleanup fees

SACRAMENTO (AP) — A state agency in charge of environmental cleanup said it has set up a team to go after more than $185 million in costs from companies that were not billed or didn't pay for pollution left behind.

The disclosure by the Department of Toxic Substances Control came on the heels of an announcement earlier this year that nearly a quarter of the companies it licenses have been operating on expired permits, including one with a permit that wasn't renewed for more than 17 years.

"There have been things wrong with this department in the past that weren't handled the best they could be," Tamma Adamek, a department spokeswoman, said Thursday.

Director Debbie Raphael discovered the collection issue and has been working to identify and correct deficiencies since her appointment two years ago, Adamek said.

Some of the $185 million in missed charges go back to the founding of the agency in 1987. The amount includes $103 million owed for the cleanup at 3,000 sites across California that was never billed, leaving taxpayers stuck with the tab.

It also includes $45 million that was billed but never collected or followed up on, and $40 million that is tied up in litigation.

"I am committed to making every effort to collect past costs and create an internal system that ensures this kind of backlog never happens again," Raphael said in a written statement.

Many of the thousands of businesses that owe money are small mom-and-pop dry cleaners and garages that operated at a time when environmental awareness was more lax. Some had been operating since the 1940s and earlier, long before the department came into existence 26 years ago.

"They were dry cleaners who dumped solvents down their sewers, which leaked into the groundwater," said spokesman Jim Marxen. "Or they were miners extracting precious metals who left chemicals behind. These were mistakes they were making because the common thought was you pour it in the dirt out back and it goes away somehow. And it didn't."

Some of the companies from which department officials have no records of payment include Pacific Gas and Electric Co. and Chevron Corp. The refinery giant is disputing its $63,000 tab, and the department says the $60,000 owed by PG&E might be an accounting mistake.

"We're in the process of seeing what's truly owed," Adamek said.

The largest debt that went unbilled was $9.4 million for cleanup at Chemical & Pigment Co. in Contra Costa County, a company that went bankrupt in 1998.

When the department was founded it set about to quickly clean up polluted sites and groundwater across the state that posed health and safety risks. Over its history, the department has collected roughly $1.4 billion for cleanup that was performed and properly billed.

"The money was used for the right purpose, it did a good thing, but we were also obligated to go after those costs," Adamek said.

State Senate President Pro Tem Darrell Steinberg told the Sacramento Bee, which first reported the issue, that agencies have a duty to aggressively recoup taxpayers' money.

"If there's money owed, collect it," Steinberg said.

Sen. Jerry Hill, D-San Mateo, who serves as chairman of the Senate Environmental Quality Committee, told the newspaper that not punishing polluters means they might do it again.

Raphael discovered the collection problem in 2011 when she was putting together a report on the department's fiscal weaknesses. She established a cost recovery team that recently discovered the problem was bigger than anyone had thought.

The team also learned that in 1992 department officials knew there was a billing problem, but records do not show why collection was not pursued.

"It's outrageous that companies like Chevron, chemical companies, and junkyards didn't get billed for cleanups and regulators stuck Californians with the tab," said Consumer Watchdog advocate Liza Tucker. "We need a full and independent financial audit of this department. Heads should roll. They've know about this for years."

The department is in the process of analyzing whether it can collect money from companies that might still be in business. Officials believe some of the costs weren't billed because project managers in the field knew it would be uncollectable so they neglected the paperwork.

"We're also redoing the process for billing cleanup sites," Adamek said. "That was the essence of the problem. It wasn't clearly spelled out. We had all kinds of mistakes that added up to a really big problem."